NYS budget includes utility rebates of up to $200, caps tax on tips

ALBANY — Qualified New Yorkers will receive utility rebate checks of up to $200 and workers who receive tips will no longer have to pay state tax on them as part of the 2026-27 state budget.

State lawmakers on Wednesday began voting on the final bills that make up the state’s more than $268 billion election-year budget, including health and revenue legislation.

 "Far too many families have been forced to simply get by while costs continue to rise and affordability feels further out of reach," Senate Majority Leader Andrea Stewart-Cousins (D-Yonkers) said in an emailed statement. "This budget is about changing that — lowering bills, expanding opportunity, and addressing New Yorkers’ desire to get ahead, not just get by."

While lawmakers touted measures aimed at making the state more affordable, the budget extends higher taxes on corporations for three years and creates a new tax on luxury second homes in New York City, known as a pied-à-terre tax.

The spending plan keeps income taxes flat and does not include any new corporate taxes. It will also send more than $1 billion to municipalities outside of New York City to help local governments remain fiscally solvent and deal with rising costs.

It does not backfill federal funding cuts made under the Trump administration that will result in roughly 450,000 low-income New Yorkers who do not qualify for Medicaid losing their health insurance on July 1.

Lawmakers and the Hochul administration have said they expect all but about 150,000 to 200,000 of those people will instead be able to get health insurance through their employer.

Budget provisions include:

• Limiting the state tax on tipped wages of up to $25,000 a year.
• Creating a tax on second homes in New York City valued at $5 million or more, phased in over three years. The surcharge is based on the value of the property, so the higher the value, the higher the tax.
• Taxing nicotine pouches at the same rate as cigarettes and other traditional tobacco products.
• Allocating $150,000 for thermal energy network projects, including those on SUNY campuses.
• Dedicating up to $75 million to help schools transition to zero-emission buses.
• Phasing out the Child and Dependent Credit for taxpayers with incomes above $750,000.

Lawmakers last week kicked off the final leg of the budget process by voting on education spending and increased protections for immigrant communities from federal agents. The voting comes weeks after Gov. Kathy Hochul’s May 7 announcement of a "general agreement" on the state budget, which was due April 1.

On Tuesday, the legislature and Hochul approved legislation aimed at lowering car insurance costs and utility rates, as well as sweetening retirement benefits for many public workers.

The remaining six budget bills were released late Tuesday and lawmakers were expected to continue voting Wednesday evening into Thursday. 

Assemb. Keith Brown (R-Northport) criticized the more than $14 billion projected increase over the prior year's spending plan.

"It’s not sustainable. We don’t have a revenue problem, we certainly have a spending problem," he said on the Assembly floor.

"This bill had a few positive pieces, but Albany once again settled for a budget that spends more without fixing the problems families actually feel," Brown said in an emailed statement on the health spending bill.

The newly released budget legislation includes a $1 billion tax rebate program known as the Protecting our Wallets Energy Rebate, or POWER, credit.

Under the rebate, married joint filers or surviving spouse filers with incomes up to $150,000 will receive a $200 check. Joint or surviving spouse filers earning between $150,000 and $300,000 will get a check of $150. All other filers earning up to $150,000 would receive a $100 check.

The rebates are based on residents’ 2024 returns, will be mailed out between September and December and are expected to help 8.2 million taxpayers.